This section describes some of the standard models that exist in order to carry out benchmarking of customer satisfaction.
6.4.1 The SERVQUAL model
One of the most widely recognised models for benchmarking cus- tomer satisfaction is known as SERVQUAL. This model was developed by Parasuraman et al. (1988). The SERVQUAL model attempts to measure the differences (gaps) that exist between what a customer expects and their perception of the level of quality they actually receive. As Parasuramanet al. believe, `the criteria used by consumers is assessing service quality to fit ten potentially over- lapping dimensions' (Parasuraman et al., 1988: p. 17). These are shown in Fig. 6.1.
Following research work by Parasuraman et al., these ten dimensions were refined and reduced to five that appear in the SERVQUAL model. As these five (which are listed below) show, the first three (tangibles, reliability and responsiveness), are unchanged from the original list, whereas the last two are a combination of the other seven original dimensions.
The five dimensions of the SERVQUAL model
The definitions of the five dimensions provided by Parasuramanet al. (1988: p. 23) are as follows:
1 Tangibles
& The physical attributes that exist in a product or service
2 Reliability
& Whether the product or service performed in accordance
with what would have been expected 3 Responsiveness
& The willingness of the service provider to respond to requests
which may require particular alterations 4 Communication
& The ability to talk to customers in a way that they can
understand 5 Credibility
& The honesty and esteem that the provider extends to
customers 6 Security
& This can be physical, financial or concern confidentiality
7 Competence
& The ability of the employees of the provider to deliver the
service 8 Courtesy
& The politeness and respect which staff in the provider
organisation give to their customers 9 Understanding/knowing the customer
& The ability of the provider to appreciate what their customers
really want 10 Access
& The ease with which customers can communicate with staff
in the provider organisation
Fig. 6.1 The ten SERVQUAL criteria used by consumers to assess service quality.
(1) Tangibles. Physical facilities, equipment, and appearance of personnel
(2) Reliability. Ability to perform the promised service depend- ably and accurately
(3) Responsiveness. Willingness to help customers and provide prompt service
(4) Assurance. Knowledge and courtesy of employees and their ability to inspire trust and confidence
(5) Empathy. Caring, individualised attention the firm provides its customers
Implications of using this model
As Parasuramanet al. point out, these five dimensions provide what they admit to be a `basic skeleton' (Parasuramanet al., 1988: p. 30).
Therefore, they advise, it will need to be `adapted or supplemented to fit the characteristics or specific research needs of a particular organisation' (Parasuramanet al., 1988: p. 31). As they also advise, the SERVQUAL model works best when it is used together with
`other forms of service quality measurement'. The most important thing about SERVQUAL, the authors stress, is that it is used systematically over a long period of time, and that any gaps that are identified are dealt with immediately. This is the most important thing to emerge from their study: that there is a desire to find measurable gaps between customer expectation and their percep- tions of the levels of service they receive. By constantly attempting to reduce such gaps, it is highly probable that the excellence this organisation provides will be improved.
6.4.2 The Christopher and Yallop model
This model is named after the people who developed it. Like Parasuramanet al., Christopher and Yallop (1991) argue that in the contemporary market the most important influence on a customer is the perception of the service they receive. Enhancing customer service, they believe, coupled with a differentiation of the core product or service that is provided, allows an organisation to enjoy competitive advantage. As Fig. 6.2 shows, Christopher and Yallop showservice characteristics to be what they call `product [or alternatively service] surround'.
What this diagram clearly shows is that whilst the basic product or service should be as good as possible, because the surround can
create 70% of the impact, it is by adding to this that market differ- entiation can be established. However, as proponents of this model stress, what constitutes the product surround are intangible; they are highly perceptual, and therefore, subjective. The consequence of understanding this, they argue, is that the method used to elicit data that concerns customer service must be sensitive to appreciating that these perceptions are what the customer feels is important to them. In order to attempt to measure the perceptions that customers have of the service they receive, Christopher and Yallop suggest a four-stage process model:
(1) Identify the elements of customer service which are perceived as being crucial by customers
(2) Find a way to understand the importance that is attached to these elements (their ranking)
(3) Discover howeffective the organisation is in providing these elements compared to competitors
(4) Having collected the data which seek to analyse the organi- sation's ability to match the expectations of its customers with respect to these elements, consider what changes can be made to implement improvement
Stage one
This stage is difficult because different customers attach varying levels of importance to the service elements they believe they
Intangible (service) elements
• frequency of on-time delivery
• reliability
• ease of doing business
• after-sales service
• consistency of product or service
Tangible elements
• quality
• features
• technology
• endurance
70% of impact but only 30% of costs
30% of impact but 70% of costs Product surround
Core product
Fig. 6.2 The addition of service elements to enhance core product.
should receive. However, unless some attempt is made to both recognise this fact and, more importantly, to understand what each customer wants, it will be unsurprising if an organisation's customers are dissatisfied. As Christopher and Yallop contend, despite the probability that differences will exist between customers' perceptions of what they believe are important service elements, it is likely there will be some commonality.
The best way to carry out this stage of the model, Christopher and Yallop suggest, is to conduct a small market research type exercise with either the most important customers or a representative sample (where there are many hundreds, for instance). The purpose, they explain, will be to:
. Appreciate the consciousness that the customer has with respect to service elements
. Understand howthese service elements compare with other influences such as price, quality of the product/service, avail- ability
On the basis of what is discovered in this stage, it should be possible to collate a list of the elements of customer service for each customer. What is important, they also advise, is to attempt to discover the relative importance that each customer attaches to these elements. Therefore, some form of measure should be included in the survey. This is further developed in stage three.
Stage two
Getting inside the minds of others is never easy; this is what stage two is about. It is inevitable that some customers, when pre- sented with a list of the elements of service that they have identi- fied, and asked to rank their importance, will say that everything is important. This is not helpful to understanding what should be done to enhance their perception of service qual- ity. In order to avoid this tendency, it is possible to use a con- sumer research technique called `trade-off'. This technique involves presenting the customer with different combinations of service elements and asking them to provide rankings of these combinations. This technique should provide a useful indication of the perceptions held by different customers of the service they expect to receive. This information is crucial to completing the next two stages.
Stage three
In order for an organisation to gain competitive advantage, it is important to gain some understanding about howwell they com- pare to others who provide products or services that the customer may choose as an alternative. Faced with a choice, we are usually able to make judgements as to who or what provides the best combination of satisfaction. Therefore, the way to find out this information is to ask those who know best about what you provide
± that is, your customers. So, using the service elements identified in stage one, it is necessary to ask customers, using a method such as a questionnaire, to rate howeffectively they perceive the ability of an organisation to achieve particular service elements when compared to other selected competitors.43
The information that this stage provides will allow an organisa- tion to see patterns of howcustomer satisfaction compares to others in certain segments or geographical areas. The use of a diagram- matic method for presenting results will assist in highlighting these patterns. For instance, Fig. 6.3 belowshows the importance that a customer attaches to particular service elements, howwell an organisation achieves the provision of these and, finally, howgood this organisation is in comparison with a selected competitor.
The virtue of using diagrammatic presentation is that potential areas for improvement should become immediately apparent.
Performance rating for individual service
components
Overall satisfaction
+
Smaller number of underlying service
factors Mean score performance ratings Performance rating
Relative contribution to overall customer
satisfaction Importance
Customer satisfaction grid
Fig. 6.3 The Prudential model for identifying crucial service factors.
Thus, if such areas emerge, it is a vital part of improvement in customer care to attempt to deal with them. This is what the next part of this process ± stage four ± seeks to do.
Stage four
This is the ultimate objective of this process ± to use the data to implement solutions which ensures that the organisation can do two essential things with respect to customer service:
(1) Seek to maximise customer satisfaction by matching their expectations
(2) Attempt to ensure that what is provided is,as a minimum, at least as good as competitors, and as part of addressing long- term improvement, better44
6.4.3 The `Prudential model'
Prudential, like its competitors in the financial advice/insurance sector, is conscious that it is operating in a crowded market. As a consequence, managers are aware that what they give their custo- mers is little different to that which competitors provide. As Pru- dential managers have come to believe, competitive advantage comes from beingperceived by its potential customers as giving a better level of service for the same price and product/service than can be purchased elsewhere. In order to do this, Prudential have developed what they call a `customer satisfaction grid' which, in conjunction with benchmarking against competitors, attempts to derive the importance of service factors, its ability to achieve them and to measure the overall level of satisfaction. Figure 6.3 shows the main features of this model.
In order to effectively use this model, it is necessary to be able to research the following questions:
. What do customers really expect, and what features of service are most critical in terms of giving value?
. What causes customers to move their allegiance?
. Have customers been consulted about what they believe would give them a better experience?
. If competitors are regarded as being leaders in their field, what features of their service provision have allowed them to do this?
. Are there any radical changes that can be implemented to achieve competitive differentiation?
Whilst all of these questions are important, the last ± considering radical solutions ± is potentially the one that will create competitive advantage. However, whilst being radical has the virtue of being perceived to be very different bysomecustomers, there is also the inherent danger of alienating other existing customers. Howmuch an organisation can do in attempting to be radical depends on the context of the service or product and what benefits may be gained compared to any losses. As with all of these models, there is no exact method of predicting the outcomes. What can be guaranteed, however, is that without some effort to understand customers, the likelihood of being `out of tune' with their expectations will be increased.
6.4.4 The `efficient consumer response' (ECR) model
This model was originally developed by a number of major com- panies that either operate in, or supply to, the retail sector in the USA.45The companies that developed this model believe that they all have one overriding objective: to provide those customers who buy groceries with the best value possible. As Zairi describes:
`The ultimate goal of ECR is a responsive consumer-driven system in which distributors and suppliers work together as business allies to maximise customer satisfaction and minimise cost.' (Zairi, 1996: p. 222)
In order to achieve these objectives, those who proposed the ECR model argued that it is necessary to analyse the entire supply chain and look for ways to ensure that the processes being used are the most effective and efficient. As such, this model has relevance to other industries that operate on the basis of supplier-chain management ± such as for instance, the construction industry.
The main principles of ECR are as follows:
. Constant focus on all of the elements that customers perceive as being about value
. Commitment by the organisations involved in the supplier chain (especially senior management) to be committed to the sort of paradigm shift that was described earlier in the chapter
. Using information in a more efficient way to increase customer value
. Intention of value creation at every step (this resembles the main
feature of lean management ± see Womack and Jones, 1996 for more information on this subject)
. Common methods of assessing performance
In conjunction with these, there are three elements which need to be engendered in implementing ECR:
(1) Encouraging the need to change attitudes and behaviour (2) Ensuring those who are involved will `see it to the end' (3) Using appropriate technology to transmit crucial information/
intelligence as fast and as accurately as possible
In the retail sector, the main focus is that the produce that is being sold provides adequate choice, is fresh, represents value for money, and that the supplier chain through which it travels is sufficient to ensure that the time from origin to shelf is both speedy and cost- effective.46Very similarly to TQM, the focus of this method is on the whole process, and therefore, involvement of all the participants.
Indeed, and consistent with one of the principles of TQM, the emphasis is co-operation of all those involved in the supplier chain to continuously look for potential areas of improvement which will directly result in increased customer satisfaction.
This model has been successfully used to create savings of up to a quarter of the total sales value. What customers experience as a result of shopping at stores that subscribe to the use of ECR is the provision of more choice at a lower cost. Advocates of ECR contend that implementation of this model is possible in industrial sectors other than retailing if there is a sufficiently strong commitment to creating the necessary changes in relationships between all of the
`partners' in the supply chain.
6.4.5 The Conference Board of Canada model
This model originated because of research by The Conference Board of Canada, an organisation dedicated to assist organisations in the implementation of improvement initiatives. Those who were involved in the development of this model analysed the experiences of some of the most customer-focused companies in the world.47As a consequence, the principles it contains can be regarded as having been successfully applied by world class performers.
As the researchers discovered by looking at organisations which had demonstrated their ability to continuously satisfy their
customers, there are certain vital features which must be in place:
. Integrated management systems which focus on best practice . Clear objectives which are articulated by the senior management . An obsession with the use of methods and techniques which
cause improvement
In particular, the study identified four essential principles that existed in each of the companies they analysed. These are:
(1) A desire to maximise the potential of every employee (2) The integration of all effort by every person
(3) Continuous improvement of all aspects of the business (4) The use of fact in order to manage
Figure 6.4 illustrates the combination of these features and principles.
Whilst this model may seem like a repetition of the principles found in others that have been described, the words `delighted customer' summarise the main corporate objective of the companies studied. In order to achieve delight, these companies went to great
Vision and values
Senior management
Current and future customer requirements Principles
Maximisation of employee potential
Continuous improvement Integration of effort Management by fact Implement an
integrated management system
Monitor and improve the management system
Fig. 6.4 The Conference Board of Canada Model.
lengths to understand the behaviour patterns and concerns of those customers who purchased their products. Moreover, some of these companies, particularly those that were Japanese, were engaged in a search for understanding howsociety might change in the future.
By doing this they believe they could be capable of meeting expectations that might be very different to those which currently exist.48